Understanding Marketing: Segmentation, Research & the Mix
Understanding Marketing Fundamentals
Marketing is the discipline that studies the exchange between the market and the customer. The business offers the customer a good or a service and in return receives something, usually payment. It is mutually beneficial because both sides gain something. It aims to identify and anticipate customer needs and to delight the customer. The purpose of marketing is to match the abilities and strengths of the business to the needs of the market.
Marketing Objectives
Sales targets, market share, and brand awareness are key marketing objectives. The marketing department will have to increase sales and focus on profitable products.
Market Segmentation
A market segment is a group with similar needs and wants. Through market segmentation, companies divide large, heterogeneous markets into smaller segments that can be reached more efficiently and effectively.
Segmentation Methods:
- Geographic segmentation: Focuses on the impact of factors such as location or climate.
- Demographic segmentation: Considers factors such as age, gender, income, occupation, marital status, and stage in the family life-cycle.
- Psychographic segmentation: Relates to personality, lifestyle, values, social class, and attitudes.
- Behavioral segmentation: Examines whether you are a regular consumer, brand loyal, and what makes you buy the product.
Effective Market Segments:
Market segments must be:
- Measurable: The size, purchasing power, and profiles of the segments can be measured.
- Accessible: The market segments can be effectively reached and served.
- Substantial: They are large or profitable enough to serve.
- Differentiable: They are distinguishable and respond differently to different marketing mix elements and programs.
- Actionable: Effective programs can be designed for attracting and serving the segments.
Market Research
Market research is the process of gathering, analyzing, and producing data relevant to the marketing process. It can identify the fundamental reason for buying a product and customer wants. It provides a manager with important information for effective decision-making as it gives a better idea of what people want and how they behave.
The Marketing Mix (The 4 Ps)
The marketing mix comprises all elements associated with a product that affect whether or not the customer decides to buy it. An effective marketing mix offers the customer the right mix of benefits at the right price. Improving the mix will involve changing or enhancing the combination of elements affecting the customers’ buying decision. It’s made up of the 4 Ps: price, product (design, quality, reliability, features, and functions), place (the way the product is distributed), and promotion (the way the firm communicates information about the product to the customer).
Product Life Cycle
- The development stage: The basic idea of the product is developed. This stage can be expensive for a firm, and no revenue is being made. It’s a time of high risk. The length of the research and development process will vary from product to product.
- The launch stage: The product is put on sale. Promotion costs will be relatively high. Producers may find it difficult to get firms to stock their products, and buyers may be reluctant to try the product.
- The growth stage: If the product becomes known and accepted by customers, sales grow. Revenues begin to outweigh costs.
- The saturation stage: The growth of sales slows down.
Advertising and Publicity
Advertising is paid-for, non-personal, promotional communication through mass media used in marketing to influence choice and buying decisions.
Publicity involves promotional activities designed to promote a business and its products by obtaining media coverage not paid for by the business.